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News

Production of Heinz ketchup back to Canada?

19/11/2020 - François-Xavier Branthôme

Next year, production for the Canadian market will be moved... in Montreal

Kraft Heinz is bringing production of Heinz ketchup to be sold in Canada back to Canada.
Six years after pulling out of its century-old plant in Leamington, Ont., and shifting production to the U.S. — a move which prompted consumer boycotts and allowed a competitor to grab a big chunk of the market — Kraft Heinz announced on Nov. 17, 2020, that its iconic ketchup brand will once again be produced in Canada.

Beginning in 2021, production of Heinz ketchup for the Canadian consumer market will be moved to an existing Heinz facility in Montreal. The plant includes a new, USD 17 million ketchup production line, which was partly funded by a USD 2 million loan from the government of Quebec.
“The timing was right to bring this great brand back to Canada,” said Kraft Heinz chief administrative officer Av Maharaj. For now, the plant will use tomatoes from U.S. suppliers the company is locked into contracts with, but within a year or two, Kraft Heinz hopes to use Canadian tomatoes to produce ketchup in Montreal, Maharaj said.

Maharaj admitted that it wasn’t ideal for the brand to have left Canada in the first place, a move which allowed competitor French’s to leap into the void and gobble up market share in the once-monolithic world of ketchup sales.
“It was unfortunate to close the plant at the time,” said Maharaj, who pointed out that several Kraft products are still produced in Leamington from local tomatoes — including Kraft barbecue sauces and Classico pasta sauces — after the company sold its plant there to Highbury Canco.

Leamington resident Scott Holland, who wrote a book on the history of Heinz’s processing plant for its 100th anniversary in 2009, said news of the iconic product’s return to Canadian production was spreading like wildfire in town. But, he added, tomato farmers and ordinary citizens alike are baffled about why the company wouldn’t want to come back to Leamington.
“Why would you refurbish a plant in Montreal when you could do it where tomatoes are grown? This is tomato country,” said Holland.

In a town where almost everyone knows someone in the tomato-processing industry, the 2014 move by Heinz still stings, Holland said.
“People are still upset. Maybe not as much as five or six years ago, but they’re still upset. If people find out they’re not using Leamington tomatoes, they’re not going to switch back, at least not around here,” said Holland, who worked at the plant during his years as an undergrad.

In the wake of Heinz’s 2014 move, French’s swooped in and began producing its ketchup in Canada, from tomatoes grown largely by farmers near Leamington. That allowed it to slap a Canadian flag on its bottles, and provided the marketing opportunity of a lifetime. Now, one of the world’s biggest consumer products giants is fighting back, said branding expert David Kincaid.
“They saw this as a dropped ball on the brand side, and they set out to correct it,” said Kincaid, founder and CEO of Level5 Brand Strategy.

Kincaid likened Heinz’s decision to pull its production out of Canada to something widely regarded as one of the greatest marketing disasters of all time.
“Strategically, this is exactly like New Coke. You gave your customers a reason to question the core value of your product,” said Kincaid.

Since the move in 2014, Heinz has seen its share of the ketchup market go from well over 80 per cent to a still substantial 75 per cent. Most of that loss has come at the hands of French’s, said Sylvain Charlebois, director of the Agri-food Analytics Lab at Dalhousie University. Bringing back production to Canada was something Kraft Heinz had to do, Charlebois said.
“The maple leaf is everywhere in the ketchup aisle. Heinz was one of the only ones that wasn’t Canadian made,” said Charlebois.

Source: thespec.com

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